For each of the following scenarios, identify the number of firms present, the type of product,
and the appropriate market model. Select the matching entry for each dropdown box in the
following table.
Scenario
Number of
Firms
Type of Product
Market Model
Many
Differentiated
Monopolistic Competition
In a major metropolitan area, one chain
of coffee shops has gained a large market
share because customers feel its coffee
tastes better than its competitors'.
Dozens of companies produce plain white
socks. Consumers regard plain white
Many
Identical
Perfect Competition
socks as identical and don't care about
who sells them their socks. The
technology for producing socks is widely
known, and any reputable person who
wanted to start a sock manufacturing
business could obtain a loan from a bank
to buy the necessary machinery.
Only three airlines fly from San Francisco
to Medford, Oregon. No new airline will
enter this market, because there are not
enough customers to share among four or
more airlines without each one
experiencing substantially higher average
costs. Consumers view all airlines as
providing basically the same service and
will shop around for the lowest price.
A publishing company owns the U.S.
copyright to a popular series of books. It
is the only company with the legal right to
publish these books in the United States.
Few
Identical
Oligopoly
